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Outsourcing of employees in the IT industry - why is it worth it and what are the types?

Employee outsourcing has been used around the world for many years. You can also hear about it more and more often in Poland. Gartner forecasts that soon its use will become the norm in most of technology companies (and not only!). Why is it especially popular in the IT industry? What are its advantages? What types of employee outsourcing are worth knowing?

Enjoy your reading.

What is employee outsourcing in the IT industry?

To begin with, let’s explain what this term really means. Outsourcing is a business practice of hiring an entity outside a given company to provide services or manufacture goods, which was traditionally performed on its own by employees working inside a given company.

It is most often used as a method to reduce business costs, such as expenses associated with the purchase of necessary hardware or software. Outsourcing also helps companies to focus on the key aspects of business activity, transferring part of the operations to external organizations. Moreover, its use minimizes the time and costs associated with recruiting and onboarding new employees.

One of the main reasons why outsourcing is particularly attractive for IT entities is the need to engage qualified specialists for the time of software development and testing. Simply said – the programmers can be hired only for the time when they are necessary. Additionally, thanks to the use of outsourcing, companies can be sure that a given project is in the hands of the right people who have the appropriate level of competence in their field, e.g. coding in a given programming language.

This is a positive phenomenon also for the outsourced programmers, as they are given the opportunity to co-create a greater number of various projects. This is related to the development of their skills and reduces the risk of burnout, which is a common phenomenon when specialists work for a long time on the same project. In addition, many people in this industry have their own business, i.e. work in the form of B2B, which in the case of outsourcing is a favorable circumstance.

Forms of employee outsourcing from IT industry

Staff augumentation
One of the most popular types of outsourcing of employees in the IT sector is body leasing. It means contracting a specialist employed by the company for a certain period of time to implement a project in another company, obviously for an appropriate fee. For the contracting company, this is an ideal way to quickly obtain human resources for the IT department without having to hire a new person. As for the outsourcing company – it allows for rational management of its resources.
How does body leasing look like in reality? Usually, a company wishing to contract an employee reports to the outsourcing company and an agreement is signed between them, allowing for placing orders for programmers. Next, the contracting company specifies its needs for an employee for a given project and defines the timeframe for such order. The next step should be the assignment of a Project Manager (PM for short) responsible for a given project, who gets acquainted with it, selects a specialist ideal for it, plans his/her work and then supervises it. If so happens that the contracted programmer is not able to complete the tasks assigned to them, the PM replaces them with another specialist from the given area. At the end of each month or at the end of the project (depending on the content of the signed agreement) the contracting company sends a detailed settlement to the outsourcing company.

Team leasing
One could say that team leasing is the same as body leasing, only it concerns contracting whole teams of programmers. Usually these are people who have already worked together before, therefore, this form of outsourcing minimizes the risk of “miscommunication” of people working together on a given project and disorganization of their work. The functioning of team leasing is usually similar to body leasing described above. The advantages of this solution are that the client strictly controls the scope and way of realization of the project, significantly saves their precious time and, additionally, gains know-how in the scope of the newest IT technologies, at the same time having great influence on the course of the processes.

Managed Services
This is a continuous provision of a service or process by an external company. The objectives of using this type of outsourcing are to improve efficiency, reduce and control operating costs while maintaining high quality of the services received, as well as higher level of security – aspecialized company provides appropriate conditions for execution and takes care of data access protection. The introduction of Managed Services is particularly welcome at the stage of implementing a new IT system. The advantage of this solution are, of course, time saving and guarantee of the highest quality of executed projects, as well as reliability in testing solutions and application of appropriate procedures.

Where to hire specialists and teams of IT specialists?

Are you thinking about using some form of IT staffing, or do you have questions that you’d like to get answers to? Click here, fill in the short form and get professional help from RITS experts.

Compare different models of cooperation with RITS
Body / Team Leasing (TL) is the simplest model focused on meeting our clients’ needs for specific profiles of professionals.
Advanced Team Leasing (ATL) offers fully qualified teams, responsible for such aspects as performance, capacity and scalability on the RITS side.
Managed Services (MS) allow our clients to focus on their core business and benefit from the end-to-end delivery of the agreed scope of work by RITS.

Function

Team Leasing

Advanced Team Leasing

Managed Services

Responsibilities for delivery       

Skills

Scope

Service

Key benefit

Support

Team

Team

Team Management

Customer

RITS

RITS

Customer Focus

Team Member

Roles and Responsibilities

Service

Scope

Undefined

Defined

Predefined

Change of scope

Very dynamic

Dynamic

Stable

Methodology

Undefined

Indicated

Owned by RITS

Operational processes

Limited

Indicated

Indicated

BSC / KPI / OKR

Limited

Yes

Yes

SLA

Limited

Yes

Yes

RITS’ responsibility for outcome

No

Yes

Yes

Fee for success / bonuses

No

Yes

Yes

Knowledge management

Yes

Yes

Yes

In contrast, the table below provides a sample of factors to consider when structuring service level agreements for different cooperation models.

Factors       

Team Leasing

Advanced Team Leasing

Managed Services

Candidate delivery time

Yes

Yes

No

Coverage of requests for personnel

Yes

Yes

No

Turnover rate

Yes

Yes

Yes

Replacement time

Yes

Yes

No

Team speed

No

Yes

Yes

Team capacity

Yes

Yes

No

On-time delivery

No

Yes

Yes

Response time

Yes

Yes

Yes

Resolution time

Yes

Yes

Yes

Hours of operation

Yes

Yes

Yes

 

Warsaw,  25 November 2021, RITS Press Office

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    Warszawa,  29 listopada 2021, RITS Press Office